nmr12354
Level 3
12-07-2019
02:05 AM
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Client received his first social security disability check in 2018 for several back years. In addition, client took $8k out of his Roth account in 2018. Tax program generated a 10% penalty because the 1099-R had a "J" distribution code. Client had no taxable income. Does the client have to pay the penalty, since he is disabled. ? Client is 48 years old
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sjrcpa
Level 15
12-07-2019
02:05 AM
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Did you enter the basis of the Roth IRA? Penalty is only applicable to the taxable portion.
Ex-AllStar
Ex-AllStar
Skylane
Level 11
12-07-2019
02:05 AM
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agree w/ sjrcpa. after you do what she said, take a look at form 5329 and instructions for the penalty exclusion.
If at first you don’t succeed…..find a workaround